The Weekend Quiz – February 25-26, 2017

Welcome to The Weekend Quiz, which used to be known as the Saturday Quiz! The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.

Quiz #414

  • 1. The private domestic sector cannot save if a nation's external sector is in balance (and thus making no contribution to real GDP growth) and the government runs a balanced fiscal position.
    • False
    • True
  • 2. Continually expanding the money supply will inevitably be inflationary.
    • False
    • True
  • 3. By voluntarily issuing debt to match its net spending, government borrowing from the private domestic sector reduces, but does not eliminate, the risk that public deficits will be inflationary.
    • False
    • True

Sorry, quiz 414 is now closed.

You can find the answers and discussion here

This Post Has 4 Comments

  1. I got number one wrong too. I think the answer is that the domestic private sector can save but at the expense of reducing future output, because part of the generated income does not flow back into the economy and thus unwanted inventory will rise and as a result both employment and investment are likely to be reduced.

  2. I got the correct answer for #1 but would not bet that it was for the right reasons. My guess was that the private sector could save in real terms even though their net financial assets would remain unchanged. For example, I could buy lots of canned goods and store them in my basement in case Trump blows up the economy. That is definitely a type of savings at least in the English Language use of savings. Maybe not how economists use the term, so I also eagerly await the answers.

  3. Number 1 wrong also
    I felt it was going to be wrong because it was worded as a simple statement

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